On December 18, 2025, U.S. stock markets experienced a strong rebound, buoyed by a cooler-than-expected inflation report and impressive earnings from Micron Technology. The Nasdaq Composite (^IXIC) led the charge, closing up 1.4%, following a surge of about 10% in Micron's shares.
The S&P 500 (^GSPC) followed suit with a gain of 0.8%, while the Dow Jones Industrial Average (^DJI) edged up a modest 0.1%. This marked a positive turn for the markets after a series of losses over the previous days.
Central to the market's recovery was the latest Consumer Price Index (CPI) report, which revealed an annual inflation rate of 2.7% for November, lower than the 3% anticipated by economists. The core CPI, which excludes food and energy, came in at 2.6%, down from expectations of 3.1%. This decrease in inflation is leading to rising expectations that the Federal Reserve may lean towards interest rate cuts in the coming months.
Despite these positive indicators, analysts warned that data from November may be less reliable due to limitations caused by a recent government shutdown. Fed Governor Chris Waller hinted at support for future rate cuts, indicating that the Fed is currently focused on labor market fluctuations rather than solely on inflation metrics.
Micron Technology (MU) was a standout performer, with its earnings report showing robust demand for AI-related memory chips, pushing its stock up 12%. The company's positive outlook has sparked renewed confidence in the tech sector, following recent fears of an AI bubble.
This optimistic sentiment helped lift not only Micron but also other semiconductor stocks like Nvidia (NVDA) and Advanced Micro Devices (AMD), which both saw gains exceeding 2%. UBS projected that the overall AI market could achieve a revenue potential of over $3 trillion by 2030, reinforcing the bullish outlook.
Outside of tech, the cannabis sector surged after President Trump signed an executive action aimed at relaxing regulatory controls on cannabis. Stocks like Tilray (TLRY) and Canopy Growth (CGC) experienced jumps of 2% and 6%, respectively, on this announcement.
Additionally, Trump Media & Technology Group saw its shares rise sharply after announcing a $6 billion merger with TAE Technologies, a company focused on fusion power, highlighting a confident push towards future energy solutions.
On the employment front, the Labor Department reported initial jobless claims declined to 224,000, down by 13,000 from the prior week. However, the uptick in ongoing claims raises concerns about the broader stability of the job market.
While the stock market enjoyed a day of gains, experts caution that ongoing volatility and future economic reports will be crucial in determining if this bullish momentum can be sustained.